There are two methods to accomplish this.

Method #1 will exclude deceased for ALL queries made by this user.
7.03.498 and lower
1. Tools -> User Options -> Query tab
2. Highlight Advanced on left
3. At bottom, uncheck "Include deceased constituents"

7.05.638 and higher
On criteria tab, uncheck Include Deceased.

Method #2: This is to exclude deceased on a per query basis
1. Filter Deceased Equals No